Calls Purchased in the EWT
I am detecting a large call purchase in the IShares Trust MSCI Taiwan Index (NYSE: EWT) this morning. Just moments ago, 20,000 June $14 calls were purchased on the offer for $0.10. This volume is considerably above open interest, indicating new, opening positioning. The EWT is currently trading $12.15, down 2.10%. It is likely that the large institutional trader is buying “cheap” call options on the heels of the sharp selloff in the index this morning; The ETF would have to break to new highs for this trade to earn a profit.
It is possible that the calls on the IShares Trust MSCI Taiwan Index were purchased against short shares, but I highly doubt that (unless the short position was existing) because the volatility of the options significantly outpaces the historical vol and executing such a trade now is not the smart, high probability transaction that large players are known for.
